Fishmeal and fish oil prices back on upward trend due to low production during the first quarter of 2014.

Faced with growing demand from the aquaculture and terrestrial animal feed sectors, production of fishmeal in the first quarter did not respond quickly. Low catch (1% of the quota) in North-Center Peru in January, a fishing ban imposed on many Chilean fishing areas for most of this period, and the slow start of the season in Europe were the major causes of lower production. Prices of fishmeal and fish oil resumed an upward trend after a short stand-by in the last few months of 2013.

Production

Fishmeal production from the top five supplying countries (Peru, Chile, Denmark, Norway and Iceland) was 17% lower in the first quarter compared with the same period in 2013. As usual, January was the last month for anchovy landing in North-Center Peru and for most of February and March there was no catch being reported from the South. According to IFFO, Peru alone produced 42.7% less fishmeal in the first quarter. The fishing ban on most Chilean fishing areas remained until early February, after which time the anchovy catch improved greatly. Accordingly, Chile produced 26.4% more than the same period of 2013. Iceland/North Atlantic produced less than half of the volume of 2013 due to the slow start and severe weather.

For fish oil production, although Peru, Denmark/Norway and Iceland/North Atlantic produced significantly less in the first quarter (-41.2%, -39.6% and -61.3% respectively according to IFFO), Chile almost doubled its production from 26 665 tonnes to 51 604 tonnes. In the first quarter, fish oil production from the top five countries dropped by 11.1% to 94 000 tonnes.

Export

Peruvian fishmeal exports for the first quarter period were reported at 369 400 tonnes, which was 165% more than the volume reported during the first quarter of 2013.  Exports to all of the major destinations increased considerably. This big increase was based on the extremely low export volume in the first quarter of 2013 as the result of low anchovy catch quota in 2012. China had the largest market share, accounting for 66.6% of Peruvian fishmeal exports. In Chile, the export volume fell slightly from 63 800 to 62 000 tonnes. Although China still accounted for 44% of Chilean fishmeal export, their import volume dropped by 28% in the first quarter of 2014 compared with the same time period last year. Japan also reduced its import of fishmeal from Chile (-64%) during the period.

In the case of fish oil, Peru almost tripled its exports from 21 700 in the first quarter of 2013 to 60 000 tonnes in the first quarter of this year. Exports to all the major destinations increased considerably, and Chile regained its position as the top Peruvian fish oil export destination. In comparison, Chilean fish oil exports almost halved during the period. According to IFFO, Viet Nam contributed 4 200 tonnes of fish oil to China during the first quarter of 2014, accounting for a 67.2% market share and representing a 307.9% increase from last year.

Markets

Germany

Germany reported total fishmeal imports of 31 400 tonnes in the first quarter, registering a 40.8% drop compared with the same time period last year. Although Peru sold 10 300 tonnes more fishmeal to Germany (+70.5%), imports from Morocco, Denmark and Iceland fell greatly mostly due to reduced production in these areas.

USA

US fishmeal imports increased by 25.5% to 12 800 tonnes when comparing the first quarter of 2014 with the same time period last year. This amount represents the highest import volume in the past six years. Chile and Mexico were the major suppliers contributing 80.5% to the US market combined. US demand was primarily from the terrestrial animal farming industry.

UK

The UK imported 9 900 tonnes of fishmeal in the first quarter of 2014, an almost 43% reduction when compared with the same time period last year, making it the lowest importing volume in six years. No imports from Iceland and Denmark were reported, although last year the two countries contributed a 28% market share to the UK. In general, the current fishmeal imports into the UK have been on a downward trend since 2010

Prices

Due to the strong demand from aquaculture and the terrestrial farming sector, fishmeal and fish oil prices in 2013 were in general quite high. In December 2013, the fishmeal prices gradually came down to USD 1 553 per tonne, and fish oil prices down to USD 1 600 per tonne. In the first quarter of 2014, due to limited production, both prices started to increase again. Soymeal prices were relatively stable during the period and its substitution role for fishmeal will continue to strengthen.

Outlook

The demand for fishmeal and fish oil from aquaculture and the terrestrial farming industry will remain strong in the long-term. Demand in Viet Nam will continue to strengthen as it became the fourth largest export destination for Peruvian fishmeal due to the fast aquaculture development in the country. Increased demand from the direct human consumption industry will also continue to push up the fish oil price in general.

As the investigation over anchovy stocks is still ongoing, there is no news yet about the quota for 2014, which will obviously affect production and prices. Although the fear of a strong El Niño effect in 2014 has subsided somewhat lately, the sector is still faced with significant uncertainty this year.